Gov. David Ige said he has been approached by more than one company looking to buy Hawaiian Electric Industries Inc. after Florida-based NextEra Energy Inc. terminated its bid for the electrical utility.
“There is interest,” Ige said.
Ige disclosed the overtures after NextEra walked away from HEI on Monday morning following state regulators’ rejection of the proposed $4.3 billion sale. In a 2-0 vote Friday, the state Public Utilities Commission denied NextEra’s purchase of HEI because the agency had doubts regarding NextEra’s commitment to the state’s goal to reach 100 percent renewable energy dependence by 2045 as well as the solidity of NextEra’s promises of $60 million in rate credits and $1 billion in statewide benefits.
When announcing the ended agreement, NextEra said it will pay HEI $95 million in “breakup” fees and other costs. In a separate announcement, HEI said that after taxes the company will gain $60 million from the breakup fees and costs, which “will help to fund Hawaii’s clean energy transformation.”
Jim Robo, NextEra’s chairman and chief executive, said in a news release that the termination was a result of the PUC’s order. The PUC’s review lasted 19 months.
“We wish Hawaiian Electric the best as it serves the current and future energy needs of Hawaii, including helping the state meet its goal of 100 percent renewable energy by 2045,” Robo said.
Connie Lau, HEI’s president and CEO, said in the news release, “All of us at HEI, Hawaiian Electric and American Savings Bank remain committed to serving our customers, and we look forward to working together with communities across our state to realize the clean energy future we all want for Hawaii and to ensure a vibrant local economy.”
The rejection means HEI will continue to run the state’s largest utility, which provides power to 95 percent of Hawaii residents through its subsidiaries: Hawaiian Electric Co. on Oahu, Maui Electric Co. and Hawaii Electric Light Co. on the Big Island. HEI’s bank subsidiary, American Savings Bank, which was to be spun off if the deal went through, will continue to operate as part of HEI.
American Savings President and CEO Rich Wacker said he was disappointed that the bank wasn’t going to become an independent operation.
“Our business has always been supporting local families and businesses,” he said. “While we are disappointed to lose the benefits this opportunity presented for ASB, there is no change in our focus to operating a high-performing financial institution and to always be a great place to bank and work.”
In its dismissal of NextEra, the PUC left open the door for other potential buyers — the agency said it included guidance on key elements that would help future companies looking to buy HEI’s electrical utilities.
Cliff Chen, manager of investor relations and strategic planning at HEI, said the company is not actively looking for a buyer.
“Other people can speculate about potential offers,” Chen said. “It’s important to remember that HEI was not seeking a buyer when NextEra Energy made its merger offer. The same is true today. HEI is a strong, independent company that is well positioned to achieve its goals and support Hawaii’s clean-energy future and economy as a stand-alone company.”
Chen said future offers would be evaluated by HEI’s board of directors, with the final decision being made by HEI’s shareholders and not outside entities.
Ige said the community needs to be involved as the state works to meet its 100 percent clean-energy goal as well as deciding how the electrical utility should be run.
“If it’s a single decision that HECO makes, they obviously are obligated to find the best deal on behalf of their shareholders,” Ige said. “What we have learned in this proceeding is that that’s too narrow of a decision. It really should be a broader decision about what’s the benefit to the broader community.”
Today some of the groups involved in the NextEra review and members of the community will gather to discuss the outcome of the PUC’s decision and the next steps that need to be taken to transform the electrical utility.
State Rep. Chris Lee (D, Kailua-Waimanalo), an outspoken opponent of NextEra, said there always have been people looking to buy HEI but that the public and local stakeholders need to work together to decide where the state wants to go.
“I don’t think without that conversation it is realistic for anybody to come and do what NextEra did,” Lee said. “Now Hawaii has the opportunity to decide its own future and how we are going to build the grid of the future. The only thing that has held that up is NextEra.”
The state appropriated $1.2 million of the 2017 budget to evaluate alternative utility and regulatory models, including cooperatives and municipalities.
Other parties that came forward during the review of NextEra’s purchase of HEI said they are still interested in pursuing other models of local ownership of the electrical utility.
Maui Mayor Alan Arakawa said in 2015 it was an ideal time for Maui to research what utility model would be best for the island as the state reviewed the sale of HEI.
“As for the county, we never stopped analyzing ways to help the utility move forward, and we will continue to do so in the coming months,” Arakawa said. “At this point the entity which runs the utility may be irrelevant. The community has already spoken, and they want their public utility to use less fossil fuels, more renewable resources and create a grid where people share and help to manage energy instead of just consume it.”
A group called the Hawaii Island Energy Cooperative was founded in 2015 to explore the possibility of a cooperative utility on the Big Island.
“Throughout this process HIEC has maintained cordial and friendly communications with the team at Hawaiian Electric, and we expect that to continue,” said HIEC Director Marco Mangelsdorf. “We will continue to advocate for the benefits of the energy cooperative model for Hawaii island as well as how we can work together to more rapidly develop cost-effective clean energies here and across the state.”